Some New Look suppliers lose key credit cover
today Apr 18, 2018
It's the latest blow in the retailer’s battle for survival and comes just a few weeks after it entered into a company voluntary arrangement (CVA) designed to reduce its costs by drastically cutting its rent bill.
New Look had seen the level of credit protection reduced by HSBC for some suppliers late last year. But the removal of it entirely means those companies would be even less likely to want to supply it with their goods, unless payment was made upfront, given that they could not be certain that they would be paid if they simply issued invoices as usual.
Having to pay in advance for goods would add to costs just at a time when the retailer is trying to reduce them.
Not that it means the company won't be able to access the stock it needs to sell. Reports have suggested that only a few suppliers will be affected, but it's a negative move nonetheless.
It's unclear exactly why HSBC has taken this decision now, although the CVA could have been a factor.
As mentioned, New Look entered into its CVA last month after winning almost unanimous creditor approval for the move. This allows it to streamline stores with 60 planned closures and rent reductions in almost 400 others. Up to 1,000 jobs could be lost as a result.
HSBC isn't alone in axing the sale of protection against insolvency for the retailer with Euler Hermes having also done so a few months ago.
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